Many of the UK’s biggest companies are handing out big pay packets, despite providing poor returns to shareholders. In this guest post, FairPensions argues that fund managers need to listen to your views.
Banks have become poster-boys for pay and bonuses which have not been linked to performance.
And as Barclays’ annual general meeting (AGM) rolled round again this year, the issue didn’t disappoint, with the row over Bob Diamond’s £17m payout – including a £5.7m ‘tax equalisation’ payment – dragging executive pay back into the headlines.
Fund managers need to take stronger action
On Friday 27 April, 26% of shareholders voted against the Barclays’ package – a massive rebellion for a UK company, and far above last year’s 9.5%.
But did you know that a good chunk of the shareholders voting on the Barclays’ payouts were doing so with your money?
If you have a pension or a stocks-and-shares Isa, you have a stake in Britain’s biggest companies – almost certainly including Barclays. In the largest companies excessive pay at the top hits you directly in the pocket – especially if it ends up damaging company performance more widely.
The government is relying on these shareholders to rein in excessive pay. Yet, although more investors are taking a strong line on rewards for failure, there’s still a reluctance to vote against management and to ensure that they link pay to providing returns to shareholders.
Even at Barclay’s, the rebellion wasn’t strong enough to defeat the remuneration report. This is not too surprising when you consider that voting rights are generally delegated to fund management firms – many of whom have conflicting business relationships with the companies concerned, and some of whom are themselves among the worst offenders when it comes to not linking pay to performance.
Have your say on high pay in the biggest companies
So did your fund try to veto Diamond’s £17m, or did it wave it through? At the moment, they don’t have to tell you. Pension funds and Isa providers aren’t legally obliged to publish their votes after company AGMs.
But this week has seen the launch of our new campaign at FairPensions – Your Say on Pay – giving you the chance to ask your pension provider or fund manager what they’re doing about high pay this AGM season. The way I see it, if we want big shareholders to act in our interests, we need to be proactive in holding them to account. FairPensions thinks that savers should have a right to know how their fund manager or pension provider has voted.
But what do you think? Should Bob Diamond have got his bonus? Do you want a say in how the shareholder rights attached to your money are used – or should it be left to the experts?
Which? Conversation provides guest spots to external contributors. This is from Christine Berry, Policy Officer at FairPensions – all opinions expressed here are her own, not Which?
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